tv Power Lunch CNBC December 28, 2009 12:00pm-2:00pm EST
good afternoon. >> good afternoon. the dow up, slight gains here. low volume. 240 million shares change hands here at the big board. dow jones average has been kept in a 36-point range. very narrow range today. as mish etch mentioned at the top of the show we are awaiting results from today's treasury auction, two-year notes. followed by a five-year note sale tomorrow and seven-year note sale on wednesday. the markets broadly flat. strength in materials and energy stocks, weakness, though, today, in the industrials as well as the consumer staples groups in today's session. two stocks really standouts when you look at them as far as a percentage winners go. fannie mae and freddie maximum higher after on christmas eve the treasury said it will be lifting a $200 billion aid cap for both of the mortgage giants. allowing them unlimited government aid for the next three years. they are off their highs of the day. still up 18%, 19% respectively. retailers also higher after
spending at four. holiday shopping season retail sales rose 3.6%, healthy sign there. moving higher and as simon mentioned weakness in the airline group weighing on the dow transportation average which is down 37 points of concerns -- not only about added security but higher oil prices, also, at play for the airlines today. let's get a check on the nasdaq. for that we go to my colleague, mike huckman. >> thanks. nasdaq is up 6.5% so far this month. whopping 80% off the march bear market lows. right now we are tacking on another five points or so. we have a couple of major stock stories to talk about here. amazon.com, apple, up about 1.8% on individual analyst estimate raises. we are seeing pressure in trading of the airline stocks. united airlines, jetblue, both down better than 2%. hampton pearson is going to get into this in a minute. but all of the airport security related stocks are trading higher today.
finally, in baby biopharma, compugen up 30%. vical up 20% with a committee giving a green light for late-stage clinical trial of a skin cancer drug to continue because it does appear to be safe. >> thank you, mike. energy markets, let's go to john kilduff. cnbc contributor. john, good to see you. pick up where you left off in the last hour. ex-main again why sit we are not seeing oil move more based on what is going on in iran? >> we are at multiweek highs. i think that we priced in a lot of the worry at this point and that's what it is basically. we have not lost, obviously, a barrel of oil to the markets. but we are continuing to monitor closely, particularly the events in iran and the trouble iran is making for saudi arabia via proxy in yemen where al qaeda there is very active. and stated goal is to toppling
of the saudi royal family. obviously these things are as a couple of steps down the road. but they are helping to get oil to about $80 a barrel which is a relatively rich premium given the supply in the golden marketplace. >> in the end you mentioned we haven't lost one barrel of oil. that is in the end the fear. right? stability leads to lack of supply or disruptions of supply? >> that's completely it. the stakes are tremendously high. we are talking about iran because obviously they sit just off of the strait. it is 100% u.s. friendly. most of the saudi oil, all the uae and kuwaiti oil off iranian shores and they could easily take that out. >> certainly high stakes. thank you, john. >> thanks, michelle. rates continue to rise. ten-year notes yielding 3.83% while stocks are modestly higher as well. will rising rates ultimately derail the rally in 2010? let's gather our "power lunch" market insiders for their thoughts on that.
ira harris, we have a lot of paper to come on the market this week. $118 billion of u.s. government debt. $44 billion within the hour. how do you think the market is braced for that? >> simon, i think the markets have been put -- they have been pushing it -- their way just like, you know, we have a tendency to mark equities at the end of the year. you are having debt traders do the same thing. we saw the absolute inverse last year. if we go back, dill back a year into the last week of december, you know, remind you that the ten-year note future is trading upwards of 125. and the 30-year future was trading at 138 and change. so that was -- everybody was nervous last year. it pushed the markets that way. we are getting a big push and especially with is reply coming at this time of the year, we are getting that push coming back down this way. >> are you nervous? it seems to me it is a holiday week, you got a lack of
participants. you had better than expethan ex data late last week. >> i'm definitely nervous for a lot of factors. particularly in the thin markets. it is tough to tell. we see a lot of vertical rapid swings one direction or the other. it is hard important the individual investor to find an entry. and just a lot of data. we have the very thin markets heading into the new year. i -- for me, i'm -- i rather let the market play out than put my own money at risk. >> dan, one could argue we have this rally over the past several months. in many ways out of whack with the fundamentals. you look at the jobs picture and housing picture in particular. how -- do you think this rally can continue and detached from what's going on in the greater picture? what are your thoughts there? >> we have seen the rally take place on federal funding. that is going away very soon in february. i would look for the market to probably take another stab, 11,000 on the dow in the first
couple of weeks in the new year. as we head into february, we will probably start to see a little bit bleaker jobs picture. temporary employment from holiday hire sing gone. we have the fed pulling back funds. we have the gloves coming off in the foreclosure market. we are going to have deat all times and redefaults to worry about. not a pretty picture. >> a lot of people are thinking about shorting treasuries or better -- going against treasuries of what might happen further down the line. morgan stanley is suggesting mortgage rates could go to 8% as a result of big spike in yields. i mean, how -- where do you dream of this going? where does -- the fed kick in for you? >> well, you know, everybody has their opinions about this. the question is how do you know when you are wrong and what do you do when you are wrong? as a trader that's what i look for. if the markets go to those types of levels and morgan stanley, you know, must be very bearish on the equity market because those types of interest rate levels will certainly quell whatever reality is existing.
>> ira, what do you think about a global picture? lot of people are bullish on emerging markets for 2010. what are your thoughts there? >> we have had a long play, michelle, in the emerging markets as the place of last -- i won't even say last resort. their situation changed over 20 years. but i think they have gotten way ahead as being the recipient of the real global growth story. i would be cautious going forward here because i want to see what is going to reply out. i think there are so many negatives this market has to face going forward. and i'm not talking about the fed raising rates. that's -- i don't believe that's going to happen. it is a political year. you know what, they are doing their job. that's what they are supposed to do. the shortened will not move. that's why today's two-year auction may make as a total nonevent. much more interest in tomorrow -- >> huge event. you have to tune in at 1:00. all right. >> sorry, sorry. i blew it.
>> $44 billion is nothing to sneeze at. >> thank you very much. >> straight ahead, attempted bombing of the jet putting a big focus on airline security companies. are we about to see a big boom in firms that make the body-scanning machines? we will tell you all about the companies that do that. >> this hour the holidays are over. the numbers are coming in. we will look at the big retail winners and losers this season. do we make the airlines pay more to beef up security? should the private sector do more instead of the government? >> get ready for the request fast money halftime report." "power lunch" is back in two minutes. the chevy malibu and toyota camry received 5 star crash safety ratings. but only malibu has onstar. big deal. i'll just use my phone. let's say we crashed. whoops, your phone's gone.
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. a look at the airline index. over the last six months, the airline stocks higher by nearly 100%. the individual results to the airlines here, delta and continental, ual, southwest, as they face more security, more hassles which might mean fewer passengers and higher costs. securities fears get back in focus, we are going to look at the companies on the frontlines of security. hampton pearson joins us from
washington with a look at the companies that make those full-body scanners. hampton? >> hi, michelle. ahead of whatever statement we get from the president later today the obama administration is ordering investigations into two areas of aviation security. how travellers are placed on watch lists and how passengers are screened. companies that make more sophisticated full-body machines and software are getting a boost. particularly what's called back scanner technology. osi systems already has an order. it has been up over 10% today. trading on thes in a district along with american science and engineering. l3 communications has been up on the nyse. meanwhile, congress is waiting in the wings with hearings next month. the senate's homeland security committee has just announced plans for hearings. their agenda will focus on watch lists and high-tech airport screening. around of interviews earlier today homeland security secretary janet napolitano was asking the key questions on
everyone's mind. >> how did this individual get on the plane? why wasn't the explosive material detected? what do we need to do to change perhaps the rules that have been in place since 2006? for moving somebody from the generic tide database to a morrell straighted status. all of that under review now. >> meantime, here's what air travelers can expect in the aftermath of the latest. increased security screening on all flights, no onboard gps or entertainment systems on inbound international flights. passengers on foreign flights also must stay seated the last hour with nothing visible in their laps. there is concern that does increase security measures, could impact business travel early next year. especially executives taking short trips. now being forced to allow even more time to get through airport security. >> thank you very much for that update from washington. cobi alexander is paying $60
million to settle remaining charges in an options backed dating case. you will recall that alexander fled three years ago to avoid facing federal fraud charges. the money will help fund $225 million class action settlement with converse shareholders that was announced earlier this month. another $2 million for that fund will come from former converse general counsel. up next, holiday shopping season turned out better than a lot of peel expected apparently. how did the retailers get consumers to open their wallets? who won and who lost this season? we will run it all for you after the break. >> on a fast list of 97 new 52-week highs, several retailers, nordstroms, tiffany's and starbucks, coach. all of them at 52-week highs. these are the building blocks of a perfect girls' weekend.
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officially becoming the most gifted product in the company's history. amazon says that customers want more e-books than physical books on christmas day. a 52-week high for amazon and nordstrom's, tiffany, coach, sears holding and starbucks. i like those watt shed. more e-books than physical books. >> overall retail sales this holiday season came in better than expected. according to spending pulse which is an information service. that's saying sales from november 1st to december 24th improved 3.6% over the same period last year. joining us now for more on the potential winners and losers there, analyst peter and bob duffy. bob, i don't want to rain anybody's parade but i'm struggling with the mastercard figures. when they say look, the extra
spending day there was this year in fact, it was a rise of 1%. what do you read through what's coming through here? >> well, i think the first thing i read through is it is very important you look at christmas to take into account january. gift cards are very large part of the season. you have to include january sales. i think that in order to really evaluate that christmas season, you got the wait and see what happens in january. almost like calling a baseball game after the seventh inning and not talking into account what happens in the eighth and ninth inning. that's what january is going to be. >> bob, one question for you. i mean, i know that the numbers are looking good. i just find it hard to believe we are going to look at the holiday season wrapped up in a pretty bow and everything back to normal and great. to what degree are some of the purchases more sort of emotional? and, you know, yes, we want to celebrate holidays. fundamentally we are looking at a big shift in consumer behavior and maybe some of the results are just the results of better inventory management on behalf of the retailers as opposed to consumer shift. >> you are spot on. when you look at the profits for many of the retailers, retailers profits, while their sales may be down this season, their
profits will be up. it is because of the exactly what you just said. much better inventory management and much better expense reductions and combination of those two will help drive profits. there really is -- look at the economic data, not enough support either when you are looking at unemployment or change in wage income to help support a significant dramatic turnaround, 3.6% increase would actually reflect. >> how about you? are you doing your channel checks. do you believe 3.6%, number coming out of mastercard? >> no. >> no. i was just going to say i agree with both of you. it is -- when you look at the number, it is only taking into consideration november 1st to december 24th. agreed you need to take the numbers that are going to be happening post christmas in january and into consideration. yes, the face of the consumer spending changed. while people were in the stores, i don't think it is going to be as much asch is expecting. >> hitha, what do you think of 2010? do you think the retail industry overstored? you mean, we are still looking
at square footage that was built and operated during the height of the boom. and, you know, what are your thoughts there in terms of retail real estate and whether it has to come down? >> i think every year we see a lot of retailers sort of come down on their real estate. last year we saw a lot of retailers close their doors. a lot of the real estate open out in the malls. but i think we are going to see a bit of attrition. that happens every year. >> the wave of bankruptcies we saw last year? >> i don't think it is going to be as prominent as we saw last year. i definitely think we are going to see some, of course. >> bob, how about you? is that worst part where we saw them falling left and right is that done? are we going to see another round come january, february? >> you are going to see on round. it will be a lot different this year. i think as we have seen the last 18 months, you have seen very large retailains go down. however, this year what you see, more of the middle market, smaller regional or specialty retail chains that are going to have problems. those that have between 20, 50 stores. those are the ones that will have the most difficulty because
they don't have access first to the capital markets the way the larger retailers do. second, made their expense reductions, better -- inventoried -- managed invent inventories much better this year and not going to be able to do that again next year. that's -- that's what's going to hurt the smaller 20 to 50-store chain this year. >> good to see both of you. hope you enjoy the rest of the holiday. >> here tees thing. i tooking a stay-cation this year. i bought myself a $50 holiday candle. this is not -- not i'm the trend but i think people are going to pare back on big things. make christmas special, holiday season special. >> not typical of retail spending. good or bad it could work both ways. >> nobody in my family -- we barely exchanged gifts this year. nobody was into it. seriously. >> maybe it is an age thing.
>> now, now, simon. >> what everybody is talking about, preventing terrorist attacks on passenger jets. should the feds force the airlines to spend more on security? will that cripple the industry? >> coming up, 1:00, get ready for the "fast money halftime report." >> coming up in under 50 minutes, retail stocks keeping the markets in holiday spirits today. following better than expected data from that group. can you still buy into those names? treasuries are slipping ahead of that government's $44 billion auction come thing week. what's ahead for the bond market? carol, when you replaced casual friday with nordic tuesday,
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highs including sjm. apple price target raise to $250. demand for iphones above estimates. potential for the tablet launch which we believe may well be slated for january. investors on the sugar high coming off the holidays. prices surging to the highest level in almost 30 year. triggered by tight supplies and very many funds. failed attack over christmas raising questions about airline safety. should the airlines spend more money to improve security? also, would airlines do a better job of protecting passengers than the government? joining us now cnbc contributor tony. information of director policy studies. good to see you. jim, let me start with you. what do you think? should the airlines be forced on spend more on security? would they do a better job than the government which obviously failed over this? >> well, i don't think more spending is necessary but better
focus may the case. i don't know what airlines or the government could have done better here other than denying this person a visa. failure was the part of the government here. we will figure out when we have more facts, obviously, exactly what it was. i don't think more spending is necessary. >> tony? >> yeah. look the way i think about it is this. when a terrorist tries to execute an attack like this, he's not attacking the airline. he's attacking the government. he's attacking the american people. and our way of life here. and so the government has a special responsibility to deal with the security measures and pay for the security measures also. airlines already, you know, carrying a lot of costs of security. they are trying to get their databases and i.t. systems in order to communicate better with government. so there are a lot of costs already imposed on the airlines. >> wouldn't the government -- how do we learn, though, two failures here. right? gave him a visa and managed to
get through security. can we make the assess many people do about a lot of different industries that the private sector would handle it better than the government? >> i would say -- >> in two ways the private sector may improve on the government. one, the private sector would coordinate security with customer service and convenience. we wouldn't suffer the same embarrassments, upsets, indignities. the other is that we wouldn't have security mono-culture. there is the same security at most airports, alliance. each airline and each handling security it is more difficult on plan. >> let me put it another way, if i may. we are talking about pricing carbon at the moment because it is a public -- for want of a better description. should we price in some form through the private sector bounties when things go well or things are stopped? penalties, big penalties when things go wrong? then you know the investment
would flow. >> i think you are seeing some of that today. you look at airline share prices today sliding. they are taking a penalty. >> negative eligible. come on. absolutely negative eligible. after the run-up they had. >> that's true but over time we see that. every time there is -- one of these kinds of incidents, the airlines suffer in terms of number of passengers that fly on them. every time government imposes new, you know, fly safe kinds of regulations that burden passengers, we see passengers making the economic decision to not fly into -- fly at cheaper times. you know, the airlines do, you know, have the penalty. you know, do i take your point on this. nobody, you know, suffers a greater -- well, not nobody but airlines suffer a cost every time there is an incident. they have an economic interest in doing this. but -- the government has the access to information and in this case, you know, we have nigeria intelligence
information. we have information delivered to the consulate and the government needs to make those decisions. intelligence services and intelligence professionals need to make, you know, good judgment calls on who is at ris. >> clearly funding is an issue here. what if -- when we had a financial crisis we came up with $700 billion t.a.r.p. bailout. you know, what -- do we need a bailout? not a bailout for the airlines but emergency fund to deal with this crisis which really could be a pretty dramatic crisis. >> the question is not money or spending. the question here is had a terrorists try to use elements of surprise. we can play, we can put all kinds of procedures in place and they come close. it is also important to understand that this was coming close. this was not a disaster. it was -- down to our last line of defense. pretty close but got to our line of defense which we do not want to do. we want to learn from this. it is important not to overreact. not to require a huge bailout. >> let's get specific.
the guy got -- prohibit tif ex-employees identify a screen. >> we don't know yet the quality of the explosive. more facts have to come out. maybe he was than able to get a good explosive on the plane because of security -- procedures that are in place. we have to analyze this carefully. not just assume facts that aren't in evidence. >> maybe he could have gotten more quantity, higher quality on to the plane but knows it wouldn't have been detected. is that the argument you are trying to make? >> he had to bring on something that's -- essentially lit himself on fire. that's the good news story we have to continue learning from it and take whatever steps are appropriate to prevent it, from real explosives getting on planes. >> we know a determined terrorist will find ways to try to beat the system. we need to go after the individuals and make sure we have good intelligence on the individuals and keep them off the plane. that's the best way to prevent these kinds of things from happening. for the long term. one point, one point on the bomb question -- there is a ticket
fee, 9/11 fee. $2.50 per segment cost per passenger that's collected today just for this purpose. >> thank you, guys. tony, jim. counterintuitive position jim has. i don't know if i agree with him. >> matt nesto is ready to go with the real-time stock flash. big treasury auction. $44 billion in would-year notes. it could be a market mover in thin markets. complete coverage. >> familiar names on the 52-week high list today. google, apple. google beyond the $600 mark. apple, $211. ibm higher as well. oracle, lower now. sandisk. as having to decide to go for it? at the hartford, we help businesses of all kinds... feel confident doing what they do best. by protecting your business, your property, your people.
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although year-to-date winners. a couple of losers here today. you are all familiar with the term bank and trust. how about bank untrust? here's the market doesn't trust bank stocks anymore. worst performers on the month. all 16 members of the banking industry group are trading lower now. key corp, marshall, fifth third. worst performers today. if you look at the month-to-day
comparison, you can see that 4% giveback and a lot of it coming today. well, 1% of it coming today. 25% of it. shows the real underperformers we are seeing in the bank on trust department. we have talked a lot about terrorism and its effects on airline stocks. illinois straight it for you with a line chart. you can see 2% decline important the xal today. what's a head scratcher is the next transportation trouble chart. look at the dow trance importants. downcle opinion 8. look at the railroad and trucking. what the heck is going on there? we understand the airline weakness but railroad weak must? yeah, pessimism about next we are and barons and csx week. trucking stocks are certainly earning year to date. but that ain't good. in terms of economic indicators. couple of other things worth looking at the unusual volume nesto picks. look at the volume. 11 million shares of aig. that is 170% of the ten-day
average. the stock is number one in the s&p right now. sandisk flipped. little change for most of the morning. now weakening up. down almost 2% here today on big volume there. that's 120% of what it does on an average day. lastly, i want to show you fun with numbers. only ten days and counting until earnings season begins. 'tis the season. the other season, folks. look at that number, though. x financials. we are not going to be up 203%, folks. back off financials, fourth quarter earnings, the magic is the streak should end. nine consecutive quarters of, well, negative earnings should end in the fourth quarter of '09. it should. >> the question is what then happens -- >> relatively great. >> i will take. >> it glass half full. >> 8% of a year ago. >> i don't know. >> x financial. >> right. businesses have to start
spending again no matter what. they have the money. we just need to see what happens. matt nesto, thanks for the picks. it is a good bet you do something differently, kaufmann's company hopes to be the ultimate consumer products business. they certainly live up to their name. >> quirky is a social product development could. ideas come in and people around the world with their product ideas and take one brnd new product a week and bring it from sketch to store. we have right now 30,000 active members. they either submit product ideas or help other people who have product videos push their ideas forward. through industrial design, mechanical engineering. logo design, tag lines, naming the products. picking the colors. designing the packaging. all influencers get credit on all of our products. and just like album would have in the music industry, our
consumer products carry the names of all the people that helped push our products forward. products are fitting for the brand name right now. i mean, we can handle anything that falls under 150 retail. normal product design and develop many product takes six months. not to say some of our products take longer than others because they do. one of the things we have is that a sufficiency where it doesn't take us very long to make decisions. decisions are aided by real market data. real-time. and that's the beauty of our platform. what we are trying to create is the ultimate consumer products business. we are trying to reach maximum efficiency on everything from design to manufacturing to distribution. >> wow. cool. still ahead, "power lunch" top of the hour, pictures from the demonstrations in iran are stunning. what does the unrest there mean for oil prices? what you pay at the pump. just about 15 minutes from now, top of the ho$44 billion on the
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halftime report." retailers are keeping the markets live as the latest round of data shows an increase in holiday spending. where are investors putting their money to work? let's get the word on the street. liquidator joe taranova. john najarian, monster.com. scott riddler. scott, let me start with you. amazon, new high here. important thing is more sold than actual physical books. stock was $50 a year ago. now it is $140. >> at this point ham don looks great. technically fundamentally and you can continue year-end. hard to chase at new highs. stay with amazon. going into the first few weeks of january. >> joe, apple, thomas making positive comments. raised some of the estimates there. here's similar situation. stocks had a huge move off of this year. >> huge move up. )y reason to remove yourselfppus from an environment where the
fundamentals and technicals of apple look phenomenal. apple continues to move higher and no reason right now to get off that trade. >> john najarian, up 3.6% in retail sales. estimates through the christmas holiday season. is there new reason to doubt the numbers at this point? people saying it is january that's going to matter. i think being above last year is a victory at this point. >> yeah. you bet it is. everybody out there pounding the table saying we are going to see a good retail season, they have been exactly right. i think that the electronics being the leader in the space, not surprising. the apple -- i-touch actually outdid it the iphone in terms of downloads and so forth. you have clearly -- like joe said, wind at your back if you are an apple investor and that's why i say that apple could put the hurt on amazon if, indeed, this tablet does get introduced in early 2010. i think that as an e-reader puts a lot of pressure on the kindle
and sony book as well. >> let's move on here. talk about our next trade. treasuries are falling today with benchmark yields reaching the highest level in six months. the government begins the sale of $118 billion of notes this week. would-year auction at 1:00 p.m. some people are arguing stocks at 2010 will be more influenced by the direction of interest rates than earnings. what's your take on this? >> well, obviously, you know, interest rates and stock prices have, you know, a strong correlation there. for a couple of reasons. you have an alternative investment situation. you have the cost of money for these businesses. and one of the things that i would highlighted here is everybody decides that they are getting concerned about the increase in rates is that the reason rates are so low is because of the economic environment we have experienced and a rise in rates might also suggest that we have some up improvements, that could provide some support. i don't necessarily think it is a complete situation for you where you have to worry about rising rates and seeing stocks get tossed out as a result. >> joe, your average investor is in a pickle now and went through
a lot of money from the stock market, november through march of this year. now they are sitting in bond finds and wondering what should we do at this point. they are on the verge of taking loss necessary their bond funds as well. what should the average retail investor do at this point? >> that's one of the reasons the equities market, corporal bond market, those markets will be desirable in 2010. ten-year treasury, lit rise. rates can't go down any further. it is going to rise, 4%, it could raise. a matter of how fast it rises. i will tell you that the equities market, i think it can withstand a rise in ten-year rates. >> john, can it withstand a rise in ten-year rates? >> you bet. i believe so, bob. i think market itself, if you look at where we were going into this debacle, rates were higher than where we are at now, obviously, because we are at record low levels. i think if we get back to a more normalized rate for the ten-year and 30-year that's not going to be bad. that's not going to be what holds the market back. what could hold the market back
are, again, taxes and other extraneous events that could like this potential terror attack this weekend those are the things that we worry about going forward. rates not so much. >> let's move on here. next trade airlines under pressure following the failed terror attack with most of the names up double digits in past month. today's downturn a buying opportunity for names? john, back to you again. the important thing about the airlines, the reason they're hitting new highs, positive fundamental commentary, revenue trends have been positive. analysts upgrade the stocks awell as earnings for next year. is this event over the weekend going to put a crimp in that? >> certainly could. the rhetoric that came out of napolitano and others it's going take you more time to clear at the airports and those kinds of things are what keep travelers from traveling. as far as business travelers and the capacity shrinkage, that shrinkage is a good thing.
i think morgan is dead right we don't get a lower price entry than where they nailed it three weeks ago. >> scott, you trading airlines? >> we took profits in the airlines. we tend not trade that quick. i'm going to avoid it. we took profits. i'm going to see where the dust settles and where it comes from the terrorist fear type trade. i'm going it take a step back on airlines. >> one of the reasons you don't want to own airlines you want to take profits, oil prices up to 79 bucks. that is too much of a factor in front of the airlines. you sell them here. >> commodities, enjoying a nice move to the upside. oil pushing towards $78. copper higher since september 2008. dennis garthman on the fast line, not only looking at commodity and corp on the upside, pla laidialladium doing >> looks like a bull market in
commodities. the general trend from the lower left to the upper right. people taking the industrial commodities obviously seeing copper taking new highs, interest rates going up telling us economic activity is picking up. making new highs across the board in corn, soybeans, impressive. perhaps due to the ill weather over the weekend which is increasing feed demand for corn and soybean meal but leaving corn in the countryside getting unharvested with huge blizzard. there's less supply, greater demand and under that circumstance, prices are tending to move high. >> what's impressing me, anybody jump in here, we are moving up in a commodity-like, copper dollar dedominated when seeing noticeable moves in the opposite direction for the dollar. in other words, that dollar strength that we've seen in the last few weeks doesn't seem to be dramatically hurting the commodities market which people felt would happen.
>> good point that needs to be it rated here. we thought all along and too many people thought commodity prices only go up at dollar gets week. but over last month and a half, the dollar's gotten stronger but all of the commodities making new highs, one has to be impressed by the that fact. >> the fact that we've got the economy. i mean, it's back to that because if we're seeing a turn in the economy and you're seeing building increase which we are, then that's going to favor copper, as pete pounds the table for it. it's not a safety play. it's a demand play. that's why copper's moving higher. >> you also want to look at emerging market demand that points to the four cs of commodities, copper, coal, crude oil and, last but not least, of course -- >> yes? >> last but not least? >> probably saying gold also a great trade moving forward in the commodities field. >> mike, what are you doing on your desk with commodities? >> i sort of felt this way for a
long time. economic r rery was going to create support for oil prices. i have always liked the energy space. it's one i'd like to stick with right here. >> guys, thanks very much. today's "fast money" with 600 etfs, we've got your outlook for the big things in the world of etfs. a look at what options market is predicting for next year. "fast money" halftime reports continue after this. stocks keeping pace despite deficit kernz loomiconcerns loo. will higher rates kill the rally or another blip on the road to recovery. a market revolution showing no signs stopping. a top etf watcher on what he's got his eye on. who came out smiling and who ended up with a lump of coal? the street's number one analyst gives us retail's holiday winners on america's post market show tonight.
welcome back to the "fast money" halftime report. joe terranova we didn't get the fourth c. we had audio problems. don't keep the suspense up. what was the fourth c? >> i should hold out until 5:00 p.m. to give you the fourth c. everyone knows about coal, copper, crude oil. one commodity underperforming corn. that's important. the ad space a critical team in theme in 2010. >> scott you're watching goldman sachs. >> it's been lagging wit the overall group. so traders are watching to see if goldman sachs could play catch-up and break that downtrend. looking around 165 to 166 about if we see a volume surge in goldman sachs through that level, add to longs and that could ignite the sector. most of the bank stocks controlled by 50-day and they
led us in the initial part of the move. we need to see if they're going to take the leadership role back as we turn into the new year. that level's important for goldman sachs. >> the call of the close here. around the horn, buy or sell, scott? >> i'm a buyer through year-end. >> john. >> i'm a buyer as well. >> through year-end? >> yes, through year-end. >> mike? >> stay long. >> a lot of bulls here today. >> joe? >> a lot of bulls. two of most important things in 2009 china and technology. tonight on "fast money" if you watch, we're going to talk about why you should stay in those trades and also tell you when it's time to get out. >> that does it for us on tonight's "fast money" top-ranked retail analyst tells us who was left smiling and who ended up with a lfump of coal this season. two-year auction, results at the top. >> minutes from now, bob, we are going to kick off a big week in treasury auctions more than 100 billion beginning with government trying to borrow 44 billion today a minute away.
two-year notes, result and market reaction. still to come on "power lunch" -- headline risk, violence erupts in iran following anti-government protests the worst since the disince the dic sputed election in june? make your bets for 2010. today's focus, options, picks and pans for the new year. "avatar," sherlock hole. s, alvin and the chipmunks, the buzz at the box office. get your popcorn, milk duds and settle in because the second hour of "power lunch" starts now. >> welcome to the second hour of "power lunch." tyler, sue and dennis are off. i'm michelle caruso-cabrera, wall street on interest rate watch. we are going bring you the numbers and market reaction as soon as they have happen in a minute. >> i'm simon hobbs.
as we wait for the treasury auction, stocks in the green for a sixth consecutive day as we kick off the final trading week of the year. right now the dow up 12 points. as you can see, ibm, at&t the biggest blue chip percentage gainers. >> joining us is leigh gallagher, assistant managing editor at "fortune" magazine. >> good to be here. >> the people that you interview, the stories that you cover, how big a story interest rates this coming year? >> they're huge. two big stories are interest rates and the end of this huge rush of government support that we've seen throughout 2009. two big things to look for. >> sovereign debt, in a sense, tied in with that. >> absolutely. >> when it comes to interest rates, right if everybody has to pay more, especially if they're a higher risk. waiting for results of the auction. $44 billion in two-year notes watching for the bid to cover. what do we have? >> the yield, okay, the yield is 1.08%, the yield was 2.9. that's about on average 2.81 is
average over the last 13 auctions. and we were trading it's a little higher yield, 1.01 for the auction ahead of this. now, 1.02, we see yields rising by 6 basis points. again, the treasury selling 44 billion in two-year notes at a high yield of 1.089%. >> that's not a bad bid to cover. last time we went through this we got 3.16. >> it is lower than the last three but still darn good. >> this isn't the time of year. >> this is a massive sale for this type of year. they've never done this kind of auction this late in the year. i think that need -- >> for the novice viewer $2.91 he for bids for every dollar of treasury to be bought. that's why we cover the bid to cover. how much does the government have to pay to borrow money when they know they have to borrow so much over the next year. >> how much foreign demand is coming through despite the moves
expecting on the dollar. >> we don't have rick santelli today we don't know the direct versus indirect. >> let's collect on the other markets. mary thompson back at new york stock exchange. >> reporter: watching closely to see the markets reaction to the treasury auction. basically there wasn't much of a reaction. the dow jones industrial average lost a point, it's right where it was before the results of the auction were announced up 13 points. that is the story throughout the day. the dow's held in a narrow range. the tone with the bias to the upside today helped in part by the strength that we are seeing in retailers and offsetting weak than we are seeing in airline stocks today which is reflected in the decline we're see in dow transportation average down 37 points. one story we've been focused on, and traders here focused on as well, fannie mae and freddie mac with the christmas eve announcement by treasury it's going to lift a cap on aid to government-sponsored enterpri
enterprises. can't was $200 billion, providing them unlimited aid for the next three years. both stocks big movers on a petrobras basis here at big board and expected to provide continued support for the housing mark. this isn't reflected in home builders which are under pressure today. evidently concerns about higher interest rates a factor at play with home builders, which again are weaker today. let's get a check on the nasdaq. mike huckman? >> reporter: here, too, absolutely no reaction to the treasury auction. we are steady as she goes up 0.2% of five points. google another new high, up 0.7%. but a is the letter of the day. a is for apple and a is for amazon. we had tam mass weisel raising estimates and price target on shares of apple 250 bucks a share. in addition, continued buzz over the rumor pending launch of the tablet, the money laptop if you
will, the stocks hitting another new all-time high. that said, let me add this caveat. they traded up to it 213.95, right now at 212.20 and amazon.com up 1.5% with lazard capital markets raising estimates on that stock. and the report out of the company that it sold more e-books than paper books for the first time ever on christmas day. of course the read through there being that means they might have had very strong sales of the kindle this holiday season. michelle, back over to you. >> thank you. peter, he grades the auction a b minus, the bid to cover was below the 2009 average and the prior three. and the yield was 1.2 basis points. level of indirect bidders 30.8 the second weakest back to the summer. peter boockvav giving it a b
minus. >> it's not bad. >> everybody's home. >> oil prices rising for a fourth straight session as anti-government clashes continue in iran. will geopolitical forces drive oil prices higher in 2010? let's bring in our all-star energy panel. kansas city with david kerish and john dikilduff with round e capital. all of the geopolitical risks talking about when we see the compelling video out of iran, how much that is going to drive prices in 2010? >> i think et ceteit's going dr prices very much. another tumultuous year because the stakes are so high talking about iran because of where they sit. what kind of oil producer they are. we're not talking about the revolution that's going on there potentially. also talking about nuclear ambitions also on the front burner particularly as we start the new year. i think it's going to feed into the security premium again. >> hang on, john. forgive my ignorance here.
if you have a regime that you were scared might launch nuclear attacks or might disrupt oil if that regime is being threatened, surely it makes it less likely they'll threaten oil sprys or launch attacks. >> you go both ways. i'm not sure the regime doesn't get so scared they don't act irracial irracial nally and lash out. >> there is the possibility there is a slight possibility of regime change which net-net would be positive potentially for a lot of reasons. >> there is. the opposition, though, right now has used what little president ahmadinejad as another issue against him. we don't seem to be getting a break on the nuclear ambitions. >> getting from here to there in the meantime what happens. >> absolutely. david, let me ask you about iraq, set to amp up production levels. how big of a threat does that pose to global supply and how in the wake of the supply and
inventory overhang that we're looking at now what do you see there? >> i think iraq has potential to be the largest factor in markets beginning in 2010 and extending throughout the medium and long term. iraq really in its two successful bid rounds changed the long-term calculus looking at supply and demand balances. we're talking about the brink countries, brazil, russia, iraq, nigeria, kazakhstan. major supplies are bringing on upwards of 3 million to 5 million barrels per day over the next five years. >> how much is just iraq, 3 million to 5 million? >> iraq end 1 million to 1.5 million barrels per day to 2010 15. >> for real because the bush administration saying we were going to get up to those levels within the invasion. >> you didn't have the ioc signing major contracts to produce the fields. you didn't see iraq off airing
generous terms if they bring oil on very quickly. now, iraq is claiming its going to have 7 million to 12 million per day come on that line, that's unrealistic. seeing 1.5 is not out of the realm of possibility. this changz oes opec's calculus >> will there be quotas? when will they take effect? >> will iraq be a member? >> that's the big question. quota questions have to begin in 2010. opec, in their last meeting, talking again about compliances, talking about production targets rather than levels which is tightening from where they were in september. you know in 2010, iraq probably only going to bring on 150,000 barrels per day of new production. but in a time when the rest of the cartel is tightening up supplies, how they sit around and say, why do we have to tighten more when iraq is
expanding production, that raises the question of bringing them back into the quota. >> john, let me come back to you. we mention i'd rack, the situation we have in iran be isn't actually the bigger issue for the oil market not the structural rebound of the brit countries, but the degree to which the economies in general around the world, united states included, are or or not going to rebound next year. that's going to determine the price of oil. >> the surprise factor what happens geopolitically with iran. what's underestimated, what seems to be attempts at dismissing their economic successes, what is happening in china. they come in month after month with record or near-record crude oil imports, sopping up refined product, iron ore, copper. >> the china story's not new. if the united states doesn't rebound economically, that's going to negate that totally, surely. sure choosing one side of the argument here. >> i think the china story continues to have a lot of skepticism in the marketplace.
that's unfounded, in my view. as much as we talk about the data -- >> but simon's question, does it meaningfully offset if there's continued weakness in the news the u.s. economy's rebounding sufficiently to put pressure on the global supply complain. i hope very much that that with the talk about iraq coming back with 300,000 barrels i right on because we need every barrel. >> guys, david, john, good to see you. >> thank you. >> thanks. straight ahead, aol and time warner, chevron, texaco, a decade filled with stunning deals. >> trillions worth of deals. mary thompson will take a closer look on the other side of the break at decade of deals. we'll keep you up to date on the market averages, not a lot of reaction in stocks to the auction but now numerous e-mails from folks saying the auction on two-year was weak and broke with a strong trend that we've seen over the last couple. @@@@@c
folks, welcome back to "power lunch." i'm matt nesto. nothing says the holidays, does it, like a rally in defense stocks. it is what it is, folks. seeing shares of, well, l3 communications they make sniffers for the airport arc among other things that they contract to the defense department and homeland security. grumman's up, strong, raytheon, it's all working in the defense space today. if you take a look at one of the
other stocks, contrarian play, numont mining stock down 10% in december. price of gold is stabilized right now. seeing that weak dollar driving oil up as well as geoflipolitic things. not participating in the material sector which is lieding the market on the sector level. on the industry group level the laurels go to my friends the reits. go figure. look at these moves today. 2% 3%. equity residential, aiv,(x plum creek, one of the biggest private land owners rallying today all 15 members in the reit index looked at trading higher today. not only number one today but for december. back to you. >> thank you. it's been not a good period for m&a deals recently but over the decade the last ten years amazing. big and small. perhaps the capper was the one made for us, nbc universal g selling a majority stake to
comcast. mary thompson has much more on the deals of the decade. >> reporter: simon, that ge/comcast deal mentioned by bankers being one of the ones that could turn out to be one of the decade's best. at this point, too soon to tell. the decade was unprecedented when it comes to m&a in terms of dollar volume and number of deals. while typically the deals are always good for the seller, their track record for the buyer, that's less impressive. one professor telling cnbc these deals deliver what they prom this in 30% of the time. here's look back at deals of the decades that did and didn't deliver on that promise. on a street where money talks, deal making has been the language of choice. >> this was the decade of m&a. >> reporter: by deal logics tally $26.8 trillion in done deals over the last ten years. a number almost double the size of the u.s. economy. fueling the boom, rise in shareholder activism, breakdown
of economic borders and two big bubbles. among the 347,704 deal ones of the big of the was a bust. aol heralding the new millennium with $112 billion purchase of time warner. time warner closing with a $3.2 spin-off of oil. >> revision is within thing, execution is another. >> reporter: bankers say executions a hallmark of a good deal. execution on integration cost cutting and delivering shareholder volume. good execution is one reason nyu's mcgill rates megamerger in the oil patch. chevron's purchase of rival texaco in 2000 a success. >> and it didn't hurt to be doubling your investment or significantly increasing it in 2000 given that the energy decade was about to follow and the val use go june timing helped chevron, peter schoenfeld said it hurt. >> they succeeded in winning the
battle but lost the war. >> reporter: rbs paid $359d billion for the dutch bank. a year later the financial crisis hit and rbs is a government-funded life support. new life is what jpmorgan's doug bronstein sayed free pack received in 2006. >> it made them the force in the copper mining industry. >> reporter: bank of america's jeff kaplan points to series dealing recharging at&t among the decade's best. >> whether krin gulsingular's acquisition. positive and creative deals. >> reporter: helping to transform the m&a landscape, private equity with hits including all-tell, take private and sold for 28% gain and misses like cerberus' investment in chrysler and a tp led injection into the failed thrift washington mutual.
bark clay's snagged one of the deals paying $1.7 billion for the remnants of lehman brothers. >> now we have collbarclays to emerge as a smaller number of leading capital and investment banks. >> reporter: just in time for a new decade of deal making. speaking of that new decade of deal making, bankers are very excited about it. they do say that ceo confident has to improve a little bit before you see it pick up in activity. activity they believe will be driven by companies that want to improve the top and bottom line through vertical acquisitions. given that the private exquift fi exquift firms have billions to, they expect private exquift to be a force in m&a. >> mary, stay with us. leigh gallagher's here from "fortune" magazine. you brought in predictions for next year. what are you predicting on m&a? >> my predicts are a little bit
out there. there's an uptick in m&a. my prediction twitter will be bought, at least a big bid, dpound founders are reluctant to sell. >> prediction on the price? >> rumored to have been facebook made a bid for $500 million a yearing aand they said no well. >> do you think down the lean they'll regard it as an aol type deal. >> it has possibility. it's a game changer. it's had hockey stick growth that doesn't sit on the shelf that long. s somebody will come after. >> video will be monetized that. people can make profits from the social net working video that's going on. >> well, that's -- video is something different and i i do -- that's unlocked on you tube and other places this year. >> how, why? >> just because how replanes to be seen but i think that, you know, i think that it's, you know, it's already happening on the video side.
music videos with a new venture called vivo. with twitter, that's different, it's the social media heating up and becoming a bigger deal. and i just think someone's going to go after it in a big way. >> mary, what's your hunch about next year? you've spoken to a lot of people in the making of the film. >> reporter: i think with the banks are saying they expect to see more deals in the energy sector, specifically exxon's acquisition late in the year and more in the health care space. not big deals we saw in the last decade with big pharma companies merging to cut costs, et cetera gu they but they expect big pharma to be more aggressive. those are two areas they're focused on for the year. >> and a lot of cash on balance sheets at moment. mary, that's correct you very much. on this thursday, a one-hour special, ten years in the making, everything from tech to corporate crime, the best and worst deals of the decade, autos and housing, thursday new year's
ryan stutland in ft. lauderdale. good to see you. >> good to see you. >> brian, let me start with you. talk about volatility, the vix below 20 year. it you had bought volatility and gone long you probably lost money. what are you recommending for 2010 when it comes to playing volatility? >> well, certainly 2009 people using the vix and using volatility as protection the whole way the market was rising from march lows. people buying puts protection after you got a rise in the stock market. >> was that a good move? >> certainly that was the wrong move. but it was right move in the sense that it kept you hedged, in the game. you felt comfortable being long. most hedgers they lose money and they're okay losing money on the hedge because they feel protected. some of that is going to be the snam same? 2010. talk about interest rates 25 basis points with the federal reserve, once it works its way in the system you get liquidity in the marketplace. it's gift to see volatility going forward.
>> bill, your big play 2010. >> every investor out there can consider using options. there's a lot of different strategies they can use. covered calls, naked puts, and all of these investors need to look at specific companies. but if you go back and look at apple, everybody's talking about hitting new highs, unbelievable. if i asked you where it was in january it 2 thou008, it's over the same price. american express, you say where was that in 2007, it's higher than it was today. >> bill, can you track back and tell us what your opinion is and what you think people should do with their money. >> sure. what people should consider, if they own stocks like johnson & johnson they need to write covered calls on those investments. if you british petroleum it's earning 5.7%. >> for the novice viewer what does a covered call do for them? >> say you buy today british
petroleum at 50.80. the company pays you 6% dividend. if the stock sat there all year, you would earn almost 10%. but as the options expire in april, you can go ahead and write them every three months out. should be able to make 15% 0 to 20% on your money on a stock if it doesn't move and that's what's exciting. >> one thing -- >> brian, do you think we'll see more attention to options in general this year? i know there a couple new exchanges, platforms, new places to trade. do you think they'll be in the limelight more? >> well if you look at volume and the options mark it's continued to grow year in, year out. 2009 was stagnant in terms of growth. 2008 a big marketplace for using options to hedge yourself as market was turning down. as the industry continues to grow and continues to move, definitely objection trading is
an area where you can add protection to your portfolio or different strategies to get long in the market and risk a lot less in what you're doing and still make the same kind of profit returns that you would in investing in stocks. that would be. i'm a trader on the cboe, my firm makes market there's. we've seen significant growth in that's correct change. cboe looking to demutualize first or second quart, there will be exchanges getting into the marketplace and it's a strong area of growth. >> we played cross the screen the specific stocks that you're interested in and indeed gold which might have come to the end of a run. a no-brainer for picking out money? >> some of the strategies, the covered call writing i look to some of those strategies and the consumer discretionaries. talk about amazon, which people don't think is a consumer discretionary, certainly it is. talk about star bucks or disney. the areas, i think they'll enter low volatility periods, be long in the stock, write calls
against it. one area that's interesting that will be over the next six months as we see this develop apple and at&t. now, at&t, it's rumored their contract will come to an end in june having exclusivity on the iphone and interesting option plays on that where you can take participate, i think apple is in a good position going forward and at&t will see movement in that sense. >> brian, bill, great to talk to you. have a great holiday. >> watch brian on "options action" airs 8:30 eastern time on cnbc. we'll head down to the floor of the new york stock exchange next and get steve grasso's forecast for the day's market action. huge weekend at box office. julia boorstin has everything you need to know. dow higher by 15 points. rrrrrrr@
high, after tam mahoma thomas w the price target. amazon.com days thanks to kindle e-books outsold physical books christmas day first time ever in a day. corn futures jumping to s six-month highs. >> if you're sitting at home christmas day and want the book down, you're going to download it now. >> many people got a kindle for christmas, what's the first thing you're going to do? buy a book. >> definitely. >> check on the market action. up on the dow. s&p up a smidge as well. mary thompson joins us. beg your pardon, live to steve grasso. >> i redid my hair. >> steve. >> who is reading paper books? nobody is reading paper books. >> or reading books at all. tell us how the markets are.
>> amazon, downloaded andrew sorkin's book on my amazon kindle it's a home run. you have to be buying amazon, the kindle, got to be buying e-reader books, that's it. end of story. how's the snashth lomarket? if we maintain above 1121 on the s&p, we have the gap higher to 1200. let's remember how precipitous we dropped from 1200 in the s&p in october of 08. we dropped precipitously, nobody stepped in and bought it you don't have the mental levels where people say i have to get out of it. we can get caught in a vacuum all the way up. >> i blamed the treasury auction or pointed to the auction for the reason for the indecision ahead of the auction at 1:00. why the indecision now? are we not going to get the santa claus rally. >> i think you're going to move higher but the market is happy with the 1121 mark. that was the fib retracement level, 1121, 1126, depending how
you look at it. >> you think the tenor of the debate is changing anecdotally. there's a lot of people breaking rank that arguably fully invested bears and are now happy to pick tunes where they say the market will correct various points through next year. you feel the tenor of the market is changing as people are forced to predict 2010? >> thigh that people are still bullish go into the first couple of months of 2010. but you have to look at higher taxes, higher corporate taxes and the market is six months ahead. that's not coming down the pike into 2011. >> higher interest rates? >> higher interest rates if you chart, if you chart bonds over equities we have been seeing higher interest rates since july in bonds. >> steve, do you think some of this is a standard december rally? we always see this, december is -- always tens to finish this way. anybody who sold did so several weeks ago. do you think that's also -- >> without question, without
question. i think funds were busy bottom picking. at this point, you know you, don't want to say dressing up the window but it's definitely dressing up the window. >> good to see you. thank you. >> hollywood is finishing 2009 with a bang breaking records but it isn't a festive time for advertisers. cnbc's julia boorstin joins us with a roundup of what's going on in media. >> reporter: it's been an unprecedented year at the box office. topped off by a record-breaking christmas weekend led by 3-d "avatar," "sherlock holmes" and "alvin and the chipmunks the squeakquel" the u.s. box office grossed $270 million the biggest three-day take ever even smaller movies like "it's complicated" and "up in the air" brought in tens of millions bring the ticket sales past $10 billion for the first time to $10.4 billion so far. but for advertising, the picture is grim. global ad spending ex-heed to drop 10% with spending in the u.s. down even more.
global spending on track to gain a hair with u.s. spending expected to continue to slide. the olympics and the super bowl aren't expected to give the lift they provided in years past. olympics on track to boost revenue by under a half a billion, 25% less than the 2006 winter olympics. and salomon smith barney s cbs sold ad inventory but pepsico sitting out. markers -- marketers can be more efficient than ever before with internet ads that are targetable and measurable and those ads are actually growing in many sectors but even the increase in internet ad spending isn't helping the overall numbers. michelle, back over to you. >> don't move. we'll bring in leigh gallagher here as well. this is the year we see people pay for content in ways they weren't willing to before? >> i think if companies can do it right, we'll see that in certain parts of the area.
in the internet people don't want to pay for news, as much as i hate to say that. some people will proprietary content can put up walled gardens if they do it the right way. i think advertising -- advertises are don't pay as much on the internet. they don't pay what they pay in traditional media. the rates are lower. until that gets involved the internet's going to be the big business boon. >> the other thing that's interesting on advertising spend, advertising is the leading indicate. which means either the ceos are not anticipating next year's great year or there's suddenly going to be acceleration of advertising trend when things are bouncing back. >> when you advertise on the internet, it's cheaper. what's the old saying? from a dollar on tv to ten cents on the internet? >> reporter: the analog pennies -- no, analog dollars. >> into digital penny yooz i think what we're seeing with internet it a different medium. it's surprising that pepsico
which wants to reach a mass audience is choosing to not go with the super bowl. tv advertising is appealing about. we're seeing cable advertising fair better than traditional broadcast because cable does have those niches so you can advertise on people watching the food network, people who watch bravo. looking at internet advertising you can target specifically that that works better for some brands than others. there will always be brands that want to advertise on television but if you're watching your marketing dollars you're trying to figure out where it's worth it. if the super bowl ad prices are high, maybe it's not worth it for some marketers this year. >> thank you. next, south korea wins dozen 20 billion contract to build nuclear power plants in the persian gulf. the u.s. energy department ready to announce loans for nuclear reactors. >> time for america to rush head long into nuclear power? both sides of the issue. markets are higher today in the wake of that raetreasury
contract beating out competitors that included general electric. in the u.s. the department of energy will act this week on 18.5 billion in loan guarantees for new nuclear reactors, that's the first time since the three-mile island accident 30 years ago. joining us now is josh barrow and trying to get him on the phone, josh tyson. should we be in fab favor of building nuclear reactors in the united states in. >> broadly yes we should have a nuclear industry supported by the market. the problem we haven't been building nuclear power plants the government behaved like lucy with the football toward the nuclear industry. in the way of three-mile island, it's an accident that did not kill anybody, the government came in and imposed stringent, new regulations that increases cost to develop nuclear power plans and more importantly, greatly increased cost of or stopped the development of
nuclear power plants that were under construction. most glaringlaringly. >> bottom line you think we ought to do this? >> yeah, i think that -- i think that loan guarantees have been authorized and doled out per the law. >> tyson in. >> look the problem is the nuclear power industry hasn't demonstrated it can deliver a cost effective product to the marketplace, that's why they're asking for subsidies unprecedented in size and scope. and when you've got cost effective alternatives available, when you're got superior technologies deployable now -- >> such as? >> renewables, efficiency. we use double electricity per person compared to competitors in europe and japan, the nuclear power industry simply does not have the track record and the costs for new reactors continues to escalate and i don't think that it is wise policy to have taxpayers not shareholders
assuming the risk. >> josh, i am surprised -- josh, i'm very surprised somebody from the manhattan institute known as being libertarian free markets would embrace loan guarantee. maybe you like nuclear energy, that's fine but you like loan guarantees? >> i don't think the government should be authorizing more on what's authorized. the nuclear policies squit frie squi squits friendic. >> as a matter of good faith to prove they mean it this time? >> yeah, and it's insurance against regulatory risk, not market risk. the big reason it's risky to invest in nuclear power plants you have situations where you spend billions in years constructing and the government didn't let you open it. >> the risk is not with government regulations. the risk is with technology and it's with it industry. the fact is that these loan guarantees are for capital costs
and the capital costs continue to increase. we've got the industry trying to build a new reactor in finland and it's already years behind schedule and billions over in costover runs. >> josh, let me ask you one question, sorry here. >> sure. >> i mean, we're looking timt wh time when energy demand is at a low. shouldn't we have been doing this two years ago? do we need this right now? >> well, energy demand is at a low. if we enact trcap and trade bil if will be more expensive. so, currently energy's at a plo low. if the administration proceeds, there will be a need for this. >> isn't this the fact it's political on capitol hill and horde to get cap and trade through there's a lot of offers to individual state senators republican united states because they have been in favor of nuclear energy in the past to
support this in order -- there's going to be more than just $8.5 billion of loan guarantees. this is going to mushroom, it right or wrong. environmentalists would say this is the get out of jail free card, arguably. >> right. that's the real issue here. is that we didn't say nothing yet in terms of public subsidies to nuclear power. this 18.5 billion is just the start. the industry has said we need $100 billion in loan guarantees. and that's been echoes by republicans like john mccain, lisa murkowski of alaska. >> guys, we're running out of time. >> a big pausch by nuclear power and allies to put tax pairs on the hook up to 100 billion in loan guarantees. i don't think that's responsible to the american tax pay. >> josh, one more xent from you? >> i agree with tyson i don't think we should be authorizing more loan guarantees. this is an attempt by the government to demonstrate good
faith but i don't think there's a need to throw more money at trough in washington asking for more. >> i don't understand why the government needs to demonstrate good faith to a for-profit industry. for-profit nuclear power industry needs to stand on its own two feet. >> you made that point already. thank you, tyson. thank you, josh. >> thanks. up next, michelle, leigh and i, go out on a limb with predicts toward 2010. >> weak innocence treasuness in stocks are high.
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folks, welcome back to "power lunch." bond issuance got you torqued up? maybe you love it. maybe you think we spend our way to pros pair fi prosperity. try the ultrashort treasury. look at those, tbt up 15% so far this month. s&p up 3%, 5-1 outperformance for the double bet short on the long treasury market. it's working. working again today. take a look at the semi curbs. up 10%.
you can see the yellow line heading south at the top of the screen as s&p tries to figure out which direction to go. semis are cooling off. sir isaac newton said for every action there's an equal, opposite reaction, here's four reasons why the great apple on the head genius was right, nvidia, broadcom, alte are the a, memc. >> matt nesto, with stocks to watch. leigh gallagher is with us from "fortune" magazine. you had your predipredicts? i mentioned a few on one, this is also out there, goldman goes private. what better way avoid the populace rage. parodied on saturday night live for hoarding swine flu vaccines. goldman can avoid this by going dark. >> do they do less risky stuff because it's their money as opposed to everybody's else?
>> maybe. or take the trading operations private which is the focus of the ire out there. you heard it here first if it happens. >> you think the end of reality tv happens in 2010? >> i think we've had enough. maybe it's me. we had the bubble boy case laid the party crashers. the public is getting tired -- their motives have shining through more. >> simon cowell signed, i read $100 million to continue. >> that may be one exception. that may be the one exception. we'll come back to scripted tv and maybe the news which in some case is more interesting than reality tv. >> always great. tiger makes a come back you think? >> yes. i'm not saying i'd want to see this happen but i think that he'll make a comeback on the golf course and pick up new endorses, i think he'll get schick instead of gillette, there's an opportunity. >> maybe get him on the cheap. >> maybe. >> i've had this conversation before. i don't think that -- >> -- not the women sitting
around the table. >> the women aren't his -- it's guys that he resonates with. >> we had eliot spitzer on msnbc every day. >> nobody sponsoring him to be the poster boy. >> but talk about run for office. >> premy prediction for 2010, the dollar will be higher. all of the sovereign problems there will be around the world, it is the reserve currency. i believe is a silly thing to bet against america. ooh think jobs and growth will be stronger. >> i think this is the year, i hope apple finally makes that bridge from the consumer to the corporation where maybe we -- if i want to -- i. ty will not deal with my apple computer, but the iphone demand is so strong, companies want to keep in contact with their employees and if enough people get the iphone they're forced to deal with apple as maybe corporate entity.
we call this "empty calories," this is the fun stuff. >> the dutch hero, the european, who prevented the bombing on christmas day, suggesting that ultimate hi le demanded money to release the graney photographs that you might have seen on news outlets credited to cnn. $18,000 was rumored to be the amount of money he was paid to do that and also did interviews with both cnn and the "new york post." do we think, guys, that that is a good thing? checkbook journalism? would it happen at "fortune" magazine? >> no it would not. i don't think it's a good thing. we know what's next, he's going get a reality show. but, no, i don't think this is a good thing. and i'm not surprised it happened, though. this is -- this is the way news
happens. >> we don't want to get too holier than thou about checkbook journalism. you say pay $18,000 for photos, distributing content. what if you hire a private jet to fly somebody back from a foreign country after a big news story? that is checkbook journalism? big companies do that as well. speaking of jets -- >> fly to miami. >> for $100,000 a new york plastic surgeon offering round trip air fare, hotel, five-star hotel -- >> that says more about you than the forry. >> rolls-royce chauffeur, see a concert with lady gaga and a breast implants. you get two for that price. $100,000 for all of those products. >> i don't think he'll have many takers. consumer spending, you know -- >> it's a price thing. >> it's a price thing. its a price thing. >> he's got a book coming out. he's looking for advertising. he managed to do it.
>> i say nothing on the story. >> "power lunch," that's it. up next, "street signs." >> amanda drewy next. it's exactly 2:00 p.m. on the new york stock exchange. markets are flat but investors on average after the attempted bombing of a flight on christmas day. as well as geopolitical tensions running high around the globe. it is 8:00 p.m. in nigeria. the home of the suspected terrorist. we're learning more about his life, his family, his homeland, and close ties to american business. and airports across the nation on alert after homeland security admits the system failed miserably. the news hitting airline stocks hard. hello, welcome to "street signs." i'm sitting in for erin burnett. geopolitics grabbing the spotlight today. wall street it's first chance to absorb and react to the rising tension around the world.
at least 15 people are dead in iran's capital following protests opposing the current regime, them rem this in sent of the protests ajune leak. 25 dead in pakistan's largest city, at a suicide bomber targeted a muslim procession. the third explosion in as many days. markets reacting to the failed atemp about a nigerian man to blow up a northwest airline bound for detroit christmas day. the oil markets and the airline sector are reacting. cnbc contributor john kilduff at the nymex, matt nesto looking at airlines and hampton pearson has a look at security companies. john, what do you see? >> a half hour to go in floor trading. crude oil future holding. all of the death and mayhem in the middle east, product options expiring which is why you're hearing activity. draw a line from